The lengths that struggling companies are prepared to go to come up with ways to reduce labour costs have been highlighted again by car maker Ford Australia.
According to a report in the Australian Financial Review this morning, Ford has proposed a two-tier wage system that would mean that new employees would get a base wage about 15% lower than existing workers.
Not surprisingly, unions have rejected this out of hand. Which is probably just as well for Ford, because a system like this would be terrible for the morale of its workforce and for Ford’s productivity.
Ford says it needs to look at all sorts of options to respond to the harsh realities of the current market.
But as we’ve said before at SmartCompany, companies need to be careful that they don’t use mechanisms such as pay freezes and two-tier systems and work-for-free arrangements to put off the inevitable – a big, painful restructure.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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